Corrupting Power of Corporate Empires

By N. Gunasekaran

Gov. Palin promised that she and Sen. McCain would get rid of the greed and corruption on Wall Street. Both parties assured voters that they would act as the agents of change in Washington. But those promises seem to be rhetorical.

Berlin-based Transparency Internationals 2008 survey of corruption was released recently. Its Corruption Perceptions Index (CPI), which is available at transparency.org, defines corruption as the abuse of public office for private gain. Encompassing both the administrative and political aspects of corruption, the group conducted surveys in 180 countries. Its report showed that corruption had hit poor countries hard. It said that $50 billion had to be added to the cost of implementing the UNs Millennium Development Goals for water and sanitation, if corruption was not checked immediately.

The study by Transparency International-India found that one-third of poverty-stricken households, earning less than a dollar a day, paid a total of more than $220 million as bribes last year for availing one or more of the 11 public services, such as Public Distribution System (PDS), hospital, school education, electricity, water supply, housing, banking and police service. Releasing the report, Indias Vice President Hamid Ansari said that corruption had become pervasive and cancerous. He also said that the resolve to usher in inclusive growth that covers all the marginalized and vulnerable sections of the society is frustrated by corruption that hinders access to basic services.

Although these findings in developing countries were shocking, the survey failed to address the ruling elites unwillingness to strengthen the transparent public sector services and build mechanisms for easy access to the poor. This is mainly due to the neoliberal bias of political elites. In many developing countries, the corporate media project the corrupt public sector as the reason for all maladies affecting the national economy. The free-market advocates conveniently use this as an effective propaganda for privatization. They force the governments to go for more and more privatization. Thus, many pubic services were handed over to profit-driven private companies. The corporations were allowed entry into the basic services like health, education and electricity, depriving the poorest to avail these services at low cost.

In India, power generation was handed over to the notorious Enron Corp. in the state of Maharashtra in 1992. Enron, once the seventh-largest corporation in the US, and the biggest collapse in American corporate history, was successful in sinking the once-prosperous Maharashtra State Electricity Board. So, the corrupt scandals involving many multinational corporations had showed that corporate private sector is the main breeding ground for corruption. With their greedy profit motives, the wealthy corporates would go to any extent, indulge in a variety of corrupt practices, from bribery and kickbacks to the embezzlement of public funds. As noted by the Nobel laureate Joseph E. Stiglitz, former chief economist for the World Bank, the Western-based corporations usually indulge in bribe payments in the developing countries, obstructing their development and growth.

The Indian Left have asked Indias ruling classes to learn not only from the Enron story, but also from the current collapse of international financial markets. The Congress Party-led government were determined to increase the foreign direct investment (FDI) cap in the insurance sector from 26 to 49 percent and to facilitate the takeover of Indian private banks by foreign banks by allowing them up to 74% stake in Indian banks and to lift the voting rights cap of 10% for FDI. Also they tried their best to privatize pension funds and invest in the stock market.

Fortunately, these attempts were stalled by the Left. Deregulation, financialization, the state acting as an agent of finance capital, the increased role for the stock market in the running of big corporations and professional corruption are all being advocated in the name of financial sector reforms. The current story of the credit crunch affecting all economies should be a fitting lesson for those wishing to go ahead with such financial reforms.

Transparency International called for bolder steps to prevent corruption. Among its various recommendations, outlawing bribery in the private sector is an important one. But the corporate system is known for violation of all laws of the land. And collaborating with the corporate classes makes the political classes corrupt. Do they have the political will to bring more stringent laws to curb corruption? What is needed is a new system of political economy functioning for the sustainability of human life, economic development and the regulation and redistribution of wealth and resources. Of course, it should be governed by a transparent, democratic state.

Giving details on the bribery scandals, corporate graft and the influence of cash in politics in the developed counties, the survey established that the wealthiest countries had failed to tackle the corruption menace. Obviously, the corruption also helped the corporate empires to amass huge wealth. Hence, there is a strong case for progressives across the world, to pressure the governments to go for tough taxation measures on the corporates in order to save the working masses from the disastrous effects of the current global crisis.

N. Gunasekaran is a political activist and writer based in Chennai, India.